Accurate tracking of the motion into a patient's body of a surgical tool, for instance, a drill bit, is crucial for ensuring appropriate utilization of the tool during surgery. Current surgical tool tracking systems typically make use of pre-operative techniques, such as MRI or CT scans, in combination with intra-operative techniques, for instance, X-ray imaging. Such techniques, however, are quite cumbersome. For example, the techniques increase radiation exposure to surgeon and patient, and ultimately, only provide two-dimensional spatial information. Some current surgical tool tracking systems also use video cameras or other localizing devices to track the movement of surgical tools in three-dimensional space. However, further improvements are possible to develop a tracking system that can be incorporated with any surgical tool and accurately track its motion.